Between school, sports, extracurriculars and playdates, you probably spend a lot of time chauffeuring the kids around. If you’re thinking of getting a new set of wheels but you’re worried that it will be a complicated and expensive process, try using a car broker.

They can help you lock in a low rate and get the best car loan, and save you a whole lot of time and money.

How do car loans work?

A car loan is a personal loan that’s tied to the purchase of a car or similar vehicle. So, if you’re in the market for a new or used car but don’t have the funds to buy one outright, a car loan is the best way to finance a car.

There are two types of car loans. A secured car loan is where you offer the car up as collateral, which means the lender has the right to repossess it if you fail to make your repayments on time. Because of that arrangement, secured loans usually have lower interest rates. On the other hand, unsecured loans don’t require any collateral, but they tend to have higher interest rates to compensate for the higher risk they pose to the lender.

Once you’ve decided on the type of car loan you want, you’ll need to choose a loan term. A car loan is a contract, and you have to agree to pay back the amount you borrow within a certain period of time – aka the “term.” In Australia, the average car loan term is 5 years. But you can opt for a term lasting between 1 and 7 years depending on the time you need to repay the loan. You’ll have a repayment schedule, and some lenders are more flexible than others.

Along with paying back the amount you borrowed, your lender will charge you interest on the balance at either a fixed or variable rate. Plus, you may have to cough up additional fees. Ultimately, to qualify for the best car loan rates, you’ll need to prove you have a steady income, a low debt-to-income ratio and a good credit score.

5 benefits of using a car broker

As you can see, there are a few pieces to the car loan puzzle! It can be tricky to secure a car loan with a low interest rate and flexible repayment schedule, which is why we recommend using a car broker like Savvy.

You might be asking, what does a car broker do? Here are a few reasons why you should consider calling a car broker:

• They can support you through the entire process. From creating a list of lenders to negotiating rates and running the pre-purchase check of your dream car, a good car broker will guide you. Thanks to their knowledge and industry experience, they can make each step seamless — just tell them your budget and what you’re looking for in a new or used car, and they’ll do the legwork for you.

• They run a car loan comparison for you. With any loan product, it’s key to shop around to get the best car finance deal. Car loan brokers are familiar with the lending landscape, so they can point you towards the one that suits your needs and financial situation. For example, if you have less-than-perfect credit, they may steer you towards an online lender who has lenient eligibility requirements. And if your main priority is scoring a low interest rate, they’ll let you know whether the big banks are a better bet. Savvy partners with over 25 of Australia’s top lenders. This means they can not only assist you in securing financing for your new ride — but they can also drive down rates based on their connections.

• They act as the middleman between you and car dealerships. Gone are the days when you’d negotiate with a car dealer on your own. The best auto brokers have relationships with an extensive network of dealers nationwide, so they can help you to narrow down your options. Since they’re so familiar with the auto industry, they also know the true value of cars — so you can drive off the lot knowing you got a great price. Plus, the top car brokers have access to cheaper “fleet pricing” because they broker deals for multiple vehicles a year.

• They save you money on your new car purchase. There are three major factors that affect your repayments: your loan amount, term and interest rate. A car broker can help you lock in the most competitive rate and save hundreds or even thousands of dollars over the life of your loan. Most car brokers charge a flat fee for their services to find the best car loan, but the savings they pass down typically make up for that cost.

• They boost your chances of getting your loan approved. Once you’ve chosen a lender, your broker will help you put together your application and gather all the details and documents you need.

Find the best car brokers in Australia

Buying a car is a huge financial commitment, and you want to make sure you’re getting the lowest rate and most flexible repayment schedule. Hiring a car broker is a solid investment, as they’ll walk you through the process and help you to save time and money in the long run.